UPDATE 1-TradeStation Q3 profit beats Wall Street estimates

* Q3 EPS $0.20 vs. analysts' estimate $0.18

* Q3 brokerage revenue up 22 pct

* Q3 net interest income fell 42 pct

Oct 23 (Reuters) - Online brokerage TradeStation Group Inc's TRAD.O quarterly earnings beat analysts' estimate, as brokerage commissions and fees surged on high trading volume.

"We continue to expect year-over-year growth in our brokerage commissions and fees in 2008," Chief Financial Officer David Fleischman said in a statement.

Net income for the third quarter was $8.7 million, or 20 cents a share, compared with $9.7 million, or 22 cents a share, last year. Analysts expected profit of 18 cents a share, before special items, according to Reuters Estimates.

Net revenue for the quarter rose 4 percent to $41.8 million, above analysts' estimate of $39.3 million.

Brokerage commissions and fees, the biggest contributor to the net revenue, rose 22 percent to $33.5 million.

Net interest income fell 42 percent to $6.3 million, due to interest rate reductions and the company expects to continue to see lower interest income than prior periods.

During the quarter, TradeStations' daily average revenue trades, or DARTs -- a key measure of trading activity for retail brokerage firms -- rose 23 percent to 108,507.

The company expects fourth-quarter earnings of 17 cents to 19 cents a share, on revenue of $39.0 million to $43.0 million.

Analysts on average expect earnings of 17 cents a share, before special items, on revenue of $38.3 million.

Shares of the Plantation, Florida-based company closed at $6.16 Wednesday on Nasdaq. (Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Dinesh Nair)